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Divided We Stand

Why Inequality Keeps Rising

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In the three decades to the recent economic downturn, wage gaps widened and household income inequality  as measured by GINI increased in a large majority of OECD countries. This occurred even when countries were going through a period of sustained economic and employment growth. This report analyses the major underlying forces behind these developments. It examines to which extent economic globalisation, skill-biased technological progress and institutional and regulatory reforms have had an impact on the distribution of earnings. The report further provides evidence of how changes in family formation and household structures have altered household earnings and income inequality. And it documents how tax and benefit systems have changed in the ways they redistribute household incomes. The report discusses which policies are most promising to counter increases in inequalities and how the policy mix can be adjusted when public budgets are under strain.

"Analyses rely on simple statistical techniques that are accessible to a large readership... the graphic and charts are of great help to gain a quick visual grasp of the various issues addressed."

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Special Focus

Inequality in Emerging Economies (EEs)

Emerging countries are playing a growing role in the world economy. It is a role that is expected to be even greater in the future. It is important, therefore, that any comprehensive assessment of inequality trends worldwide considers the emerging economies. This chapter discusses inequality patterns and related issues in the biggest emerging economies. It begins with a brief overview of such patterns in selected countries, before going on to examine in greater detail the main drivers of inequality. The following section outlines the key features and challenges of underlying institutional settings. Finally, the chapter sets out some key policy challenges that the emerging economies need to address to improve income distribution and curb inequalities, while promoting more and better jobs.

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